Question

Problem 19-32 (Algorithmic) (LO. 1, 4) At the start of the current year, Blue Corporation (a...

Problem 19-32 (Algorithmic) (LO. 1, 4)

At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of \$365,000. Blue's current E & P is \$219,000, and at the end of the year, it distributes \$730,000 (\$365,000 each) to its equal shareholders, Pam and Jon. Pam's stock basis is \$51,100; Jon's stock basis is \$204,400. How is the distribution treated for tax purposes?

If an amount is zero, enter "0".

Each shareholder has dividend income of \$________. In addition, Pam has a reduction in stock basis to \$and a capital gain of \$_______. Jon has a reduction in stock basis to \$________.

 Blue corporation accumulated earnings E & P \$365,000 current E & P \$219,000 Total E & P \$584,000 upto which distribution is treated as divdend distribution Distribution \$730,000 Pam Jon Total Distribution \$365,000 \$365,000 \$730,000 Dividend 292000 292000 \$584,000 Excess over Dividend \$73,000 \$73,000 \$146,000 Less: Stock Basis 51100 204400 capital gain/new stock basis \$21,900 \$   131,400 Capital Gain Stock Basis

Each shareholder has dividend income of \$292,000. In addition, Pam has a reduction in stock basis to 0\$ and a capital gain of 21,900. Jon has a reduction in stock basis to \$131,400.

Earn Coins

Coins can be redeemed for fabulous gifts.